This chapter is about the human population and how it can be turned into an asset for the economy. Like other resources, the population also is a resource – a ‘human resource’. The human population is not a problem but a very important asset for an economy when it is turned into human capital. The population becomes human capital when there is an investment made in the form of education, training and medical care. In fact, human capital is the stock of skill and productive knowledge.

  • Education and health care added to the quality of labor. This enhances the productivity of people. Skilled and healthy person can contribute to the creation of gross national product and thus adds to the growth of the economy.  
  • Investment in human capital is just like an investment in other capital as it yields a high return in the future in the form of higher earnings due to its increased productivity. Human capital is superior to other resources like land and physical: human resources can make use of land and capital. Land and capital cannot become useful on its own.
  • Many countries like Japan becomes developed country by making investment on its people especially in the field of education and health. This investment increased the efficiency of people to use other resources. Efficiency and technology developed by people have made these countries rich and developed.
  • India’s Green Revolution and IT revolution are striking instance of  the importance of human capital.


The various activities have been classified under three main sectors: –

  1. Primary sector :- it includes agriculture, forestry, animal husbandry, poultry farming, fishing, mining and quarrying.
  2. Secondary sector :– constructing and manufacturing included in this sector.
  3. Tertiary sector :–  activities like trade, transport, communication, banking, education, health, tourism, services, insurance etc are included in this sector.

The activities in this sector result in the production of goods and services. These activities add value to the national income. These activities are called economic activities.

Economic activitiesNon-economic activities
These activities are undertaken to earn money or financial gain for livelihood.These activities are not concerned with money but are performed out of emotions and pleasure.
All economic activities result in production, consumption and distribution of goods and services.The end result is the mental, emotional or psychological satisfaction of the person doing these type of activities.
Economic activities contribute to the flow of goods and services in an economy.Non-economic activities do not contribute to the flow of goods and services in an economy.
These activities lead to an increase in the personal income as well as the national income.These activities don’t lead to an increase in income.
All economic activities can be valued in monetary terms. e.g. doctor charges Rs 500 for treatment.Non-economic activities cannot be valued in monetary terms. e.g. NGO distributes free food and cloth to poor.
Economic activities are related to creation of wealth. e.g. Raj saved part of his salary to purchase a house of his own.Non- economic activities do not create wealth. e.g. money received in donation is spent on charity work.
Activities done by farmers, lawyers, teachers, governments etc are examples of economic activities.Charitable activity, social service, a housewife cooking food for her family etc are example of non economic activities.

Economic activities have two parts, a) Market activities b) non-market activities.

Market activitiesNon-market activities
These activities are performed for getting some remuneration.Non- market activities are performed for self-consumption.  
These activities include the production of goods and services which are sold in market for money.These activities can be for consumption and processing of primary products for one’s own self.
It gets you profit.It doesn’t get you any profit.
For example, a big farmer cultivates crops and sells in the market to earn money.For example, a small farmer cultivates vegetables in a small plot for self consumption.

Men generally work outside home and produce goods and services to earn money for livelihood. These economic activities add value to the national income.  Women generally look after domestic chores. They are not paid for their services delivered in the family. The household work done by women is not recognized in the national income.

A majority of women work in unorganized sector due to having meagre education and low skill formation. They are paid low compared to men. However, women with high education skill formation choose to work in organized sector and are paid at par with the men.

Organized sectorUnorganized sector
The sector is registered by the government and has to follow rules and regulation.The sector is not registered by the government and not bound to follow rules and regulation.
The terms of employment are regular.The terms of employment are not regular.
The sector is governed by various laws such as the Factory Act, Minimum Wages Act, etc.The sector governed by any act.
The employees get social security benefits like provident fund, gratuity, medical benefits etc.There is no such provision for labours working in this sector.
This sector includes banks, hospital, schools, industries, etc.This sector includes a large number of people who are employed on their own doing small jobs, etc.


The quality of population depends upon the literacy rate, health of a person indicated by life expectancy and skill formation acquired by the people of the country. The quality of the poulation ultimately decides the growth rate of the country. Literate and healthy population are an asset.

  • Various provision has been made by central government for providing universal access, retention and quality in elementary education with a special emphasis on girls.
  • Navodaya Vidyalaya has been set up in each district. Vocational streams have been developed to equip large number of high school students with occupations related to knowledge and skills.
  • The expenditure on education as a percentage of GDP rose from 0.64% in 1951–52 to 3.0% in 2015–16. However, the expenditure has declined to 2.7% in 2017–18.
  • The literacy rates have increased from 18% in 1951 to 74% in 2010-11. Literacy is not only a right, it is also needed if the citizens are to perform their duties and enjoy their rights properly.
  • The primary school system has expanded to over 8.41 lakh in 2015–16. Unfortunately, this huge expansion of schools has been diluted by the poor quality of schooling and high dropout rates.
  • To achieve universalisation of elementary education, Sarva Siksha Abhiyan was started to provide elementary education to all children in the age group of 6–14 years. Along with it, bridge courses and back- to-school camps have been initiated to increase the enrolment in elementary education. Mid-day meal scheme has been implemented to encourage attendance and retention of children and improve their nutritional status. These policies could add to the literate population of India.
  • The 12th plan focuses on distance education, convergence of formal, non-formal, distance and IT education institutions. Over the past 50 years, there has been a significant growth in the number of university and institutions of higher learning in specialised areas.
  • The health of a person helps him to realise his/her potential and the ability to fight illness. He/She will not be able to maximise his/her output to the overall growth of the organization.
  • Life expectancy has increased to over 68.3 years in 2014. Infant mortality rate (IMR) has come down from 147 in 1951 to 34 in 2016. Crude birth rates have dropped to 20.4 and death rates to 6.4 within the same duration of time. Increase in life expectancy and improvement in childcare are useful in assessing the future progress of the country.
  • Over the last five decades, India has built a vast health infrastructure. But there are many places in India which do not have even these basic health facilities.
  • There are only 532 medical colleges in the country and 313 dental colleges. Just four states, like Andhra Pradesh, Karnataka, Maharastra and Tamil Nadu have the maximum number of colleges.

Unemployment is said to exist when workforce population who are willing to work at the going wages cannot find jobs. Work force population includes people from 15 years to 59 years.

Nature of unemployment differs in rural and urban areas. In case of rural areas, there is seasonal and disguised unemployment. Urban areas have mostly educated unemployment.

Seasonal unemploymentDisguised unemployment
Seasonal unemployment happens when people are not able to find job during some months of the year.A situation wherein more people are engaged in an activity or work than actually required are termed as disguised unemployment.
Example: agricultural labourers find work only during busy season, i.e.,sowing, harvesting, weeding and threshing. Remaining months, they have not much work.Example: sometimes in agricultural families, eight people are working in a farm where only five people are needed to do that work. If three people are removed the productivity of the field will not decline. The field requires the service of five people and the three extra people are disguised unemployed.

EDUCATED UNEMPLOYMENT :-  it is found mostly in urban areas. When educated people do not get job according to their educational standard is called educated unemployment. A study showed that unemployment of graduate and post-graduate has increased faster than among matriculates.

  • Unemployment leads to wastage of manpower resource. People who are an asset for the economy turn into a liability.
  • Unemployment tends to increase economic overload. The dependence of the unemployed on the working population increases.
  • The quality of life of an individual as well as of society is adversely affected.
  • There is a general decline in its health status and rising withdrawal from the school system.
  • Unemployment has detrimental impact on the overall growth of an economy. Increase in unemployment is an indicator of a depressed economy.

Categories: General


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